Stanbic Bank steps up loan recovery as defaults mount

Stanbic Bank along Kimathi Street on December 13, 2014. FILE PHOTO | NMG
Stanbic Bank along Kimathi Street on December 13, 2014. FILE PHOTO | NMG 

Top-tier lender Stanbic Bank #ticker:CFC has embarked on a more aggressive drive to get its clients to repay overdue loans as it seeks to reverse the sharp rise in defaults experienced in the third quarter of this year.

The financier, which is among the eight tier-one lenders that together controlled 65.3 per cent market share of total net assets of the banking industry last year, has reported one of the biggest growths in gross non-performing loans (NPLs).

Stanbic’s gross NPLs jumped Sh2.83 billion, or 43.67 per cent in three months through September to Sh9.31 billion.

“We are actively engaging our clients to ensure that we resolve the matters that have led to the non-performing loans situation,” the bank said in a statement sent to the Business Daily.

“We are positive that the actions instituted through partnering with our clients will resolve the nonperforming position within the next six to nine months,” it added.

Co-operative Bank #ticker:COOP posted the third largest growth of Sh4.71 billion, or 38.54 per cent to Sh16.93 billion in the review period.

The bank’s net profit in nine months through September grew 19.71 per cent— the highest growth among tier-one lenders — to Sh3.23 billion because of absence of Sh1.2 billion foreign exchange loss hit it suffered in a similar period last year.

Stanbic has proposed an interim dividend payout of Sh2.93 per share, something that may be a welcome to shareholders who missed out last year.

Without the one-off adjustment, the bank’s profits would have dropped by about the same margin they grew in the period.

Stanbic’s profit before tax, dropped by 17.36 per cent to Sh4.38 billion, hurt by rising provisions against bad loans and falling interest earnings. Provisions against bad debt nearly doubled in the review period, rising by Sh88.47 per cent to Sh2.27 billion.

Net interest income, on the other hand, fell by 6.49 per cent year-on-year to Sh7.77 billion, said the bank controlled by South Africa’s Standard Bank Group — the largest lender by assets on the continent.

“Standout feature was the 88.5 per cent year-on-year rise in loan loss provisions noted from a sharp 43.6 per cent quarter-on-quarter rise in gross non- performing loans (NPLs) during the quarter (July to September),” analysts at Genghis Capital said in a market note.